Lottery sales fall off 4th month in a row

— With October ticket-buying down sharply from a year ago, Arkansas’ lottery ticket sales in the first four months of this fiscal year have dropped by $18.3 million over the same period last year to $132.3 million, a lottery spokesman said Tuesday.

The amount that the lottery raised for college scholarships during these four months also slipped, by $2.6 million, over the same period last year to $27.1 million, lottery spokesman Julie Baldridge said.

A key lawmaker said the 2013 Legislature could try to cut the size of the Academic Challenge scholarships for students who receive the scholarships for the first time in the 2013-2014 school year.

“As we get more information from the lottery, $3,500 seems to be a more realistic number than certainly $4,500 [for students who receive the scholarships for the first time in the 2013-2014 school year at the four-year universities in the state],” said Sen. Johnny Key, R-Mountain Home, cochairman of the Legislature’s lottery oversight committee.

Students who receive the scholarship at the state’s twoyear colleges receive half the amount that those at the fouryear universities get.

Students who were first awarded the scholarship for the 2010-2011 school year receive a $5,000 a year scholarship to attend four-year universities and $2,500 a year at two-year colleges.

Those who were first awarded the scholarship in either the 2011-2012 or 2012-2013 school years get $4,500-a-year scholarships at four-year universities and $2,250 a year at two-year colleges.

More than 30,000 students have received the scholarship in each of the past three years.

October was the fourth consecutive month this fiscal year in which the lottery’s ticket sales dipped compared with one year ago.

Ticket sales last month slipped by $3.8 million from October 2011 to $33.8 million, said Baldridge.

Lottery Director Bishop Woosley said a “continuing trend of economic factors,” such as high gas prices, are affecting ticket sales.

Noting a story in Tuesday’s Arkansas Democrat-Gazette about gas prices slowly dropping over the past three weeks, he said, “I don’t think it is any coincidence that our sales have also ticked up each of the last three weeks.

“Our sales are driven by discretionary money,” Woosley said. “The more items such as gas cost, the less discretionary money people have to spend.

“I don’t think you can discount the impact of the drought we saw in July and August of this year, the distractions related to the election and the ‘fiscal cliff’ issue we are currently facing,” he said, referring to federal efforts to avoid tax increases and spending cuts.

“This is an environment where people do not know if and by how much their paychecks will be impacted in the next few months,” Woosley said.

He said it’s difficult to determine whether the drop in ticket sales is solely related to economic issues or “if we are seeing a trend.”

The lottery raised $6.6 million for college scholarships last month compared with $8.1 million in October 2011, Baldridge said.

During the f irst four months of this fiscal year, the lottery raised $27.16 million for college scholarships, including $1.9 million in unclaimed prizes that will be transferred to scholarships at the end of the fiscal year, compared with $29.8 million for the same period last fiscal year, she said.

“Obviously, if sales fall you will likely see a corresponding drop in revenue,” Woosley explained.

One key difference is that ticket sales for number games in October 2011 were spurred by a large Powerball Jackpot that grew throughout October to more than $250 million on Nov. 1, 2011, he said.

For fiscal 2013, Woosley has projected $98 million in net proceeds based on projected ticket sales of $480.5 million. The net proceeds become the scholarship funds.

In fiscal 2012, the lottery raised $97.5 million for scholarships based on $473 million in ticket sales.

As for whether he’s considering reducing his projection for net proceeds in fiscal 2013, Woosley said, “We will continue to monitor sales and revenue each month and adjust accordingly.

“We are in constant communication with the Department of Higher Education and keep them abreast of our situation,” he said.

Key said he knows lottery officials are working hard to boost lottery ticket sales and the amount raised for scholarships.

“But there are so many conditions working against them that it is going to be tough to overcome,” he said.

Shane Broadway, interim director of the state Department of Higher Education, is keeping Gov. Mike Beebe apprised of lottery ticket sales and the amount raised for college scholarships, said Beebe spokesman Matt DeCample.

Beebe doesn’t have any proposals for changing the Academic Challenge scholarship program at this point, DeCample said.

The state is setting aside $20 million a year from its general revenue to help fund the scholarships. But the program is projected to have shortfalls ranging from $19.9 million to $24.6 million a year in fiscal years 2014-2017 even with the state aid, because the lottery’s net proceeds aren’t expected to be nearly enough to cover projected scholarship costs, according to the Bureau of Legislative Research’s projections.

And the scholarship program doesn’t have enough money in its $20 million reserve fund to cover these shortfalls, legislative analyst Heather Tackett has said.

In September, Key proposed overhauling the program and awarding scholarships in amounts based on the number of cumulative credit hours that students successfully complete. His goal, in part, is to eliminate projected shortfalls in the program during the next four years.

Under Key’s proposal, students would get $2,000 a year scholarships in their freshman years, $3,000 a year scholarships in their sophomore years, $4,000 a year scholarships in their junior years and $5,000 a year scholarships in their senior years no matter whether they attended a two or four-year college.

Key said Tuesday that he doesn’t know that the Legislature’s lottery oversight committee “will have agreement on [changing the] criteria or structure” for the scholarship program.

“But I think the numbers are going to speak for themselves,” he said.

Front Section, Pages 1 on 11/14/2012

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